Space and AI Surge Past Electric Cars
Elon Musk’s SpaceX has surged to a valuation of $1.25 trillion (€1.06tn) after merging with artificial intelligence venture xAI, dramatically narrowing the gap with Tesla and reshaping the balance inside Musk’s business empire. Tesla is now valued at about $1.58 trillion (€1.34tn), just 26% higher than SpaceX’s latest private valuation. On paper, Musk now draws more of his personal wealth from rockets and AI than from electric vehicles.
Tesla’s position has weakened since the start of 2026. Shares are down roughly 6% after the company reported a 16% drop in vehicle deliveries and a 3% decline in total revenue for 2025 — the first annual fall in its history. Increased competition in China and Europe, combined with the end of US federal EV tax credits, has put pressure on the core car business. Musk’s political associations have also sparked backlash that has weighed on the brand.
Tesla Pivots as EV Momentum Fades
With electric vehicle sales slowing, Musk is steering Tesla toward robotaxis and its Optimus humanoid robots, despite both remaining unproven at scale. Last week, he confirmed Tesla will stop producing the Model S and Model X, which made up less than 3% of deliveries last year, and convert those production lines for Optimus development.
While Tesla repositions, SpaceX continues to dominate its markets. It is the world’s leading orbital launch provider, holding major contracts with NASA and the US Department of Defense. Its Starlink satellite internet service now operates more than 9,000 satellites and serves around nine million customers globally.
Under the newly announced deal, SpaceX is valued at $1 trillion (€847bn), while xAI is priced at $250 billion (€212bn). The merger builds on last year’s transaction in which xAI acquired social media platform X, formerly Twitter.
Big Ambitions, Bigger Risks
Musk says the SpaceX-xAI merger is designed to support the creation of space-based data centres, arguing that orbit could ease Earth’s energy constraints. Analysts, however, remain cautious, noting that such plans face steep technical, financial and supply-chain hurdles. Challenges include radiation shielding, cooling systems and the cost of launching and assembling heavy equipment in space.
The deal also introduces fresh risks. SpaceX profits could be redirected to fund xAI’s expansion, while xAI itself faces growing regulatory scrutiny. Authorities in Europe, the US, India and Malaysia are investigating its Grok image generator over the creation of explicit deepfake content, and French investigators have raided X’s offices over alleged algorithmic misconduct.
For now, those issues may be easier to contain while SpaceX remains private and tightly controlled by Musk. But any future public listing would likely bring sharper questions about whether investors are willing to support such a lofty valuation alongside rising political and regulatory pressures.
